Offered through FIRST MORTGAGE CORPORATION

1. The “SAPPHIRE” Program Training Offered through FIRST MORTGAGE CORPORATION Desktop Underwriter is a registered trademark of Fannie Mae. Loan Prospector is a registered trademark of Freddie Mac. This presentation is a summary and is not complete. This information is for mortgage professionals only and should not be distributed to or used by consumers or other third-parties. Information is accurate as of the date shown below and is subject to change without notice. 6/12/2014

2. Agenda • Introductions • “Sapphire” Program • Program Overview • Eligibility Highlights • Income Calculation • Underwriting Guidelines • Maximum Allowable Fees • Process Flow • Reservation and Locking

3. State Restrictions Market Challenges & Access Solution Introduction

4. Purpose of the Program • Purpose of the Program… • Provide financing to families and individuals who can afford a mortgage loan but do not have the resources for the down payment and closing costs • What we provide… • First Mortgage Corporation offers affordable financing designed to increase homeownership opportunities to low-to-moderate income individuals and families in CALIFORNIA.

5. NAME CHANGE The formerly known: CHF PLATINUM has changed its name to… SAPPHIRE EFFECTIVE JUNE 1, 2014

6. Program Overview • What the “Sapphire” Program Offers… • 1st Mortgage Loans: • FHA and VA available products • Available throughout the State of California • Interest Rate available at the Reservation Portal at https://nhfresportal.nhfloan.org • The published rate is subject to change at any time • Grant: • Up to 5% of the 1st lien loan amount (including upfront MIP or VAFF) • Proceeds can be used for: • Down Payment • Closing Costs • Prepaid Items • Earnest money • MIP • Not a 2nd lien; does not need to be repaid, nor is it calculated into the DTI/CLTV • There must be no cash back to the borrower from the Grant Fund proceeds

7. Income Eligibility Borrower Eligibility Property Eligibility ELIGIBILITY GUIDELINES

8. Eligibility - Income Tip: Use the Income Limit spreadsheet on the FMC website SAPPHIRE Income Limit

9. 2014 SAPPHIRE Income Limits

10. Borrower Qualifying

11. Eligibility - Borrower • Borrower must meet the following requirements: • Be a US Citizen, permanent resident alien, or qualified alien (Eligible Veteran for VA financing) • Occupy the residence as their primary residence • Non-occupant co-borrowers/co-signers – NOT allowed • Borrower qualifying income cannot exceed NHF Income limits for the county in which the property is located • 115% Area Median Income (AMI) • Minimum Credit Score of 620 • Meet all required agency Guidelines (FHA HUD 4155 / VA Handbook, plus FMC overlays)

12. Eligibility - Properties • Properties Allowed: • Single Family Units • FHA Approved Condominiums • Planned Unit Developments (PUDS) • 2-Unit properties • Ineligible Properties: • 3-4 Unit properties • Manufactured housing • Investment properties • Rental Homes • Co-ops • Recreational, vacation, or 2nd homes

13. Eligible 1st Mortgage Program Down Payment & Closing Cost Assistance SAPPHIRE PROGRAM

14. SAPPHIRE Program

15. ADDITIONAL GUIDELINES General Underwriting Guidelines Pricing, Costs and Fees

16. Underwriting Guidelines

17. Underwriting Guidelines

18. UW Guidelines cont’d…

19. FMC - FHA Overlays

20. SAPPHIRE Interest Rates SAPPHIRE Allowable Fees SAPPHIRE Program INTEREST RATES & FEES

21. Maximum Allowable Fees

22. PROCESS FLOW & REGISTRATION Process Flow Registration Process

23. Loan Process • Borrower must meet the following requirements: • Loan Officer pre-qualifies borrower for Sapphire loan and NHF income limit. • FMC Branch submits the fully processed file to Underwriting for loan approval • FMC underwrites the loan • Upon loan approval, the Branch is notified to reserve funds and lock loan • FMC close/pre-fund 1st mortgage loan • FMC includes the grant on our lenders instructions and we over wire the amount when we fund our loan which means, we no longer wait an additional 24 hours to fund a Sapphire loan.

24. NHF’s EIN # • NHF’s EIN #: 42-1549314 • We are required to reflect NHF’s EIN on HUD’s FHA Loan Underwriting and Transmittal Summary in conjunction with secondary financing assistance, grants or gifts to the borrower when the borrower is receiving an FHA First Mortgage.

25. NHF Reservation Portal • Borrower must meet the following requirements: • Reservations will be handled at the FMC Branch level using the Reservation Portal on the NHF website www.nhfloan.org • The Reservation Portal can be accessed Monday through Friday between 9:00 AM and 4:00 PM PST. • In order to access the Reservation Portal, a “User ID” must be used. • One user ID and Passcode will be assigned to each branch by the Vendor Support team at FMC. All prior user ID’s have been de-activated. • The Reservation Portal will identify whether a loan registration initially qualifies based on Income and Credit Score Limits information provided, and provide an electronic confirmation (Commitment Confirmation) of the registration which must be provided in the loan file.

26. NHF Reservation Portal

27. NHF Reservation Portal • Modifications to a reservation will require approval from the Administrator/Manager (NHF). • You may cancel the loan registration via the Reservation Portal, which will provide electronic confirmation of cancellation. NHF charges a cancellation fee of $400 for each cancelled loan. This fee if applied will be passed on to the Branch (Broker for Wholesale transactions). • If you cancel a loan, you may re-register the loan only after 30 calendar days from cancellation date via the Reservation Portal. • You automatically reserve funds for Down Payment Assistance at the time of loan registration via the Reservation Portal. • An extension to a reservation will require approval from the Administrator and will be subject to market conditions. A minimum fee of 0.375% of the loan amount will be applied to extensions. Fees may be higher depending on market conditions.

28. Lock Period • Reservation Period: 30 days • FMC requires reservations to be done at time of Docs (after loan approval) • Cancellations may require a $400 fee • Cancellations require a waiting period of 30 days before re-reserving • Lock Period: 30 days • A copy of the reservation confirmation must be forwarded to the Doc Department with the Doc Order Request

29. Program Additional Documents • The following forms are required in all Sapphire loan files: • Commitment Confirmation • NHF Gift Letter • NHF has implemented a new Grant/Gift Letter that now requires the borrower(s) signature.  This new letter is printed out with your reservation once funds are reserved and must be signed by the borrower(s) before they request the grant. • Grant amount must be rounded to the highest dollar. • Make sure the loan approval and the LT reflects the exact loan amount rounded to the highest dollar to avoid delays in docs/funding.

30. Program Additional Documents

31. FMC Support • TRAININGS • First Mortgage offers FREE Weekly ONLINE Trainings • See the FMC website for the June 2014 Training schedule • Trainings for June 2014: • 6/3 – FMC Product Overview • 6/4 – Access/FirstDOWN Program • 6/10 – NEW PROGRAM Training • 6/13 – Sapphire Program Training • 6/17 – FHA 203(k) Streamline Program Training • 6/19 – FHA EEM Program Training • WEB SITE • FMC WEBSITE: • https://firstbase.firstmortgage.com/ • Rate Sheets • Training Materials • Guidelines • Forms • Marketing • Tools • Calculators SUPPORT Retail: Loan Help Wholesale/Correspondent: Your FMC Account Executive For help with your: • Scenarios • Pricing / Fees • Guidelines • Loan Submissions • Trainings

32. On behalf of First Mortgage, thank you for joining today’s training and we hope the information provided will help you build your business! The main purpose of First Mortgage Corporation’s (FMC) training documents is to assist real estate and mortgage professionals in developing entry-level competence with loan programs. While FMC staff, employees, contractors and contributors take care to ensure the accuracy of the content of training documents, FMC makes no warranties as to the accuracy of the information contained within these materials. Furthermore, every user of this material uses it understanding that he or she must still conduct his or her own original legal research, analysis and drafting. In addition, every user must refer to the relevant legislation, case law, administrative guidelines, rules and other primary sources. FMC specifically disclaims any liability for any loss or damage any user may suffer as a result of information contained within this training material. While the information contained in FMC’s training material addresses guidelines and issues surrounding mortgage programs, these materials do not constitute legal advice. All non-legal professionals are urged to seek legal advice from a lawyer. Thank you for your business!